Gold
Gold

The CUSTOMS Division of the Ghana Revenue Authority last week impounded 12 boxes containing gold bullion meant to be exported out of the country without the necessary documentations at the Kotoka International Airport (KIA).

The swift move follows a tip-off to the Airport Customs officials who nearly missed the opportunity of apprehending the bullion weighing about 480 kg and valued at $18 million.

The timely intervention of the Customs officials prevented the goods from being exported by Emirates Airlines without any form of documentation and inspection.

The seized gold bullion belonged to the following Licensed Gold Exporters (LGEs): BGC International, K. K. Enterprises (both Indian Companies); A.A. Minerals, Italtec Ghana Limited and Guldrest Resources (Ghanaian companies)

It is pertinent to note that this activity of the LGEs exporting gold without any documentation is a daily occurrence at the Kotoka International Airport and they (LGEs) do this to avoid paying the appropriate taxes to government as well to avoid the repatriation of the proceeds back into the country, and thereby putting undue pressure on the Cedi/Dollar exchange rate.

It was for this reason that the Bank of Ghana (BoG) last year came out with the directive to streamline the gold export procedures, for which the LGEs went to court and have been able to secure an injunction against the directive. Hence, the measures were introduced to proactively monitor Gold exports.

The BoG said it was forced to introduce new rules for gold exports due to the consistent under declaration and smuggling of gold exports from Ghana. However, the Association of Gold Exporters of Ghana (AGEG) sued the Central Bank for introducing measures to streamline the processes for documentation of gold exports. Also affected in the suit were PMMC and Customs Division of GRA.

Per the new measures by the Central Bank, all exports of gold must be done only through the PMMC. However, the gold exporters challenged the appointment of the PMMC as the certifier for gold exports.

PMMC is a limited liability company operating under the Companies’ Code, with the Government of Ghana as the sole shareholder. Per the new rules, Licenced Gold Exporters (LGEs) will also not be permitted to export gold for third parties.

According to the BoG, authentication would also be required of all LGEs, thus the exporters must download Form FEX A4 from the Bank of Ghana website (www.bog.gov.gh) for completion and submission in connection with gold exports.

The BoG earlier warned that gold exporters who failed to comply with the new measures on or after the effective date would not be able to export gold.

It must be noted that one of the factors that have contributed to the fall of the cedi against some major foreign currencies is as a result of the invasion of some foreigners in the small-scale gold industry, where they buy and export without repatriating the money back into the country.

These foreign gold traders, who have illegally entered the mining communities are purchasing gold directly from the small-scale miners and exporting the gold themselves and as a result, ripping off the country of several millions of dollars annually.

Available information from India showed that between January 2014 and January 2016, a total of 101,179 kg of gold valued at $3,607,415,756.36 was shipped out of the country without going through the necessary processes, a situation that ripped off the state an amount of $6,367,088.81 in revenue in terms of royalty.

Though the law calls for 80% repatriation of money realized from gold exports, these foreigners, most of whom have shops in Ghana, rather keep the foreign currency in their offshore accounts and then use the Cedis realized from their shops to buy more gold for export, and this has resulted in putting pressure on the few dollars in the system. This has adversely affected the local currency because the dollar becomes a scarce commodity in the country. Hence, the high rise of the dollar.

The small-scale miners prefer doing business with the foreigners because the foreigners offer better price, even though most of them are not licenced to buy or export gold, a situation that is denying the country millions of dollars that would have otherwise accrued to the state if all gold produced by small-scale miners went through PMMC for export.

These foreigners come to Ghana unregistered, and get some Ghanaians to aid their illegal business. They equally do not pay any tax to the government because nobody monitors them.
If there are regular inflows of dollars into the country, the rate would go down or stabilize.

The cedi rate falls because it is a matter of demand and supply; there are not enough foreign exchange in the system and so there is a high demand for it, which at the end of the day pushes the price up but if there is too much dollar in the system, the tendency for the rate to come down is high.

Some private individual Ghanaians who got licences from the Minerals Commission to buy and do their own shipment of gold have decided to take PMMC’s mandate of Third Party shipment for others, especially for these foreigners, where they charge them very little.

It is only when all these foreigners are taken out of the system, and government reverts back the policy of shipment to PMMC only, and the company in turn do the COCOBOD model, where all Third Party shipment automatically go through PMMC, which would repatriate the money back into the country.

The PMMC is rather in competition with private companies who have licenses to export gold from Ghana. The reality on the ground is that because PMMC is poorly managed, it is currently unable to compete with private licensed gold exporters resulting in the current Managing Director aggressively lobbying government to make it the sole exporter of gold.

They LGEs contend that PMMC cannot be a referee in a competitive match in which it is one of the teams on the field. If this directive is for the purpose of ensuring that PMMC provides assaying and valuation services for Bank of Ghana, then it is problematic due to PMMC’s status as an exporter of gold. In this regard, the Ghana Standards Authority may be better placed to handle this role in that it would most likely be accepted as an independent institution which is not in competition with the exporters.

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